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December 2016

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With positive market outlook for wool, there are good prospects for sheep producers in Australia, independent agricultural economist Peter Rowe said while speaking at the DAFWA Agribusiness Sheep Updates.

Although wool prices have witnessed a fall in recent times, wool prospects remain to be good, backed by steady demand, he said.

Wool, as a commodity, was doing quite well till the recent financial crisis in Europe. The price of wool increased from 990 cents per kg in 2010 to a record high of 1,500 cents per kg around the start of 2011, which raised the confidence that the commodity is rising above the impacts of the recession.

The positivity in wool prices continued until July last year, after which there was a fall in demand for wool owing to the concerns about the eurozone debt crisis and people started apprehending that the EU economy may collapse, Mr. Rowe said.

Despite a fall in demand from Europe, wool growers are still receiving orders from the US and an emerging group of buyers from China, which raises optimism that wool prices would rise and stay up in the future, he said.

Mr. Rowe predicted that Australia’s wool output for current fiscal would remain slightly above last fiscal, while that of China and New Zealand would fall.

He also forecasted that India and the UK’s wool output for the period will remain steady and none of the major wool producing countries is seen making any addition to the existing sheep flock.

He added that though there has been a slight fall in demand for Australian wool, there are good prospects in other markets like India, China and the US.